IT is only logical that relations with countries in one’s
neighbourhood receive high priority in the conduct of a country’s foreign
policy. But there has been little understanding about what really
constitutes India’s neighbourhood. Are we to regard ourselves merely as a
‘South Asian power’, as some Chinese friends choose to characterize us?
Addressing senior commanders of the armed forces on 1 November 2003, former
Prime Minister A.B. Vajpayee said that in maritime terms, India’s
frontiers extended from the Straits of Malacca in the east to the Straits of
Hormuz in the west. Further that India’s security boundaries also extended
from Afghanistan and Central Asia in the northwest to China in the northeast
and across East Asia to our neighbours in ASEAN. Prime Minister Manmohan
Singh gave a similar description of our ‘extended neighbourhood’ when he
addressed senior commanders in October 2004.

The countries in our extended neighbourhood that have
substantive economic and military potential to influence events are China,
Japan, Iran and South Korea. China, with its rapid economic growth and
growing military muscle unquestionably poses the greatest challenge to the
conduct of India’s foreign policy in the neighbourhood. Pakistan too has
the potential to act as a spoiler because of the Islamic dimensions of its
foreign and security policies, its nuclear potential and an ability to
project itself as a valuable asset for the United States and China. This
ability to influence events has, however, been considerably diminished in
recent years because of domestic turmoil within the country and a growing
fear worldwide that Pakistan has become an epicentre of global terrorism.

Russia has an important role to play in the region
primarily because of its military and political ties with China, India and
Iran, and its residual influence in Central Asia. The European Union wields
economic power and has a security role whenever NATO interests so demand.
But the only country with power to dominantly influence events in our
neighbourhood is the United States. Its global policies, therefore, will be
a crucial determinant of the course of events across our strategic
frontiers, more so since NATO forces are deployed in strength at our virtual
doorstep, Afghanistan.

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here is
considerable logic in the manner in which prime ministers Vajpayee and
Manmohan Singh have defined what constitutes our ‘neighbourhood’. To our
west, Pakistan and Afghanistan have become the epicentre of global
terrorism. The porous border between Pakistan and Afghanistan today allows
the free movement of terrorists from across the world, ranging from China,
the Philippines and Myanmar to our east to Algeria, Uzbekistan, Yemen and
Saudi Arabia, apart from EU countries like the UK, France, Germany and
Spain, to our west. Whether it is the terrorist strikes of 9/11 in New York
and Washington DC, or the train bombings in London and Spain, the origins
and planning of such acts of global terrorism can be traced to Pakistan and
Afghanistan.

Worse still, Pakistan today faces the ire of its
erstwhile Taliban protégés and their sympathizers and supporters within
Pakistan for supporting the US in Afghanistan. The security situation has
deteriorated to such an extent that even the capital area of Islamabad-Rawalpindi
is no longer immune to terrorist attack. Apart from the assassination of
Benazir Bhutto, there have been four other major terrorist attacks in
Rawalpindi targeting the army and ISI headquarters and personnel in 2007.

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he American ‘War
on Terror’ and the ouster of the Taliban from Afghanistan have resulted,
not in the destruction but the dispersal of terrorism worldwide. The cadres
of the Taliban and its Pakistani allies have crossed into Balochistan and
the tribal areas of the North West Frontier Province (NWFP). A substantial
portion of the Al Qaeda fled into Pakistan, with some members returning to
Arab countries. With NATO forces stationed in Afghanistan, there is a sense
of unease in neighbouring Iran, given the strain in US-Iran relations.

Further westwards, Iran’s seven Gulf Arab neighbours
too are uneasy, with Saudi Arabia facing a number of terrorist strikes by
pro-Al Qaeda elements. Iranian-Arab rivalries and suspicions remain rooted
in the Persian Gulf from where India gets 70% of its oil supply, and nearly
four million Indian nationals work and remit over $ 15 billion annually to
the economy. Tensions and instability in the Persian Gulf will have serious
implications for India’s economic stability and energy security.

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ndia also faces
an uncertain political situation in virtually every one of its South Asian
neighbours who are members of SAARC. Maldives is facing a crisis of
credibility of its leadership, with periodic acts of terrorism by radical
elements motivated by religious-political ideologies prevalent and preached
in Pakistan and Saudi Arabia. The fairness and impartiality of elections
held by President Gayoom have been called into doubt. The ethnic conflict
continues in Sri Lanka, with President Rajapakse’s government appearing
determined to seek a military solution – a policy that can only complicate
the search for a durable political solution. India has to actively work with
the international community to persuade the Sri Lankan government on the
crucial need for a political settlement which meets the legitimate
aspirations of its Tamil minority, while guaranteeing the unity and
territorial integrity of the island nation.

Bangladesh also faces an uncertain political future, with
no sign as yet about precisely how the political process will be put back on
track and the army returned to barracks. Moreover, radical Islamic groups
operating from Bangladesh are now getting increasingly involved in acts of
terrorism across India. In Nepal, uncertainty continues and concern is
voiced about whether the Maoists will genuinely give up arms and join the
democratic fold. Will Nepal succeed in developing viable democratic
institutions in a new post-monarchical era? Bhutan alone, among India’s
South Asian neighbours, appears to present a picture of stability and
progress.

While outlining relations with neighbours, one should not
fail to acknowledge that India itself faces many challenges within its body
politic – problems arising from poor governance coupled with rampant
corruption and criminalization of politics. It is not unlikely that in these
circumstances, neighbours like Pakistan and Bangladesh may take advantage of
religious and ethnic faultlines within India. Recent terrorist strikes in
Bangalore, Hyderabad, Mumbai and in Uttar Pradesh have been carried out by
disaffected Indian nationals deriving inspiration, motivation, support and
sustenance from across our borders.

Neither the causes of this development, nor its possible
remedies are publicly discussed, far less effectively addressed. Moreover,
the writ of the Indian state no longer runs in nearly one third of the
country, which is now under the shadow of Maoist control. Ethnic
insurgencies continue in the Northeast with support from across the
India-Bangladesh border. Though levels of terrorist violence have
substantially reduced in the recent past in Jammu and Kashmir, problems of
disaffection among sections of the population in this turbulent state remain
to be addressed.

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he picture,
however, improves as India looks further east. India’s interaction with
ASEAN, as a part of its increasingly successful ‘Look East’ policy, has
grown substantially. Two-way trade with the booming economies of ASEAN
countries has risen to around $ 19 billion in 2006-2007 and with China to $
38.7 billion. But in comparison to China, whose trade with ASEAN was $ 140
billion in 2006, India has a long way to go before it can become a major
economic player in East and Southeast Asia. Fortunately, India now figures
in the security and economic calculations of its ASEAN neighbours, having
become a ‘full dialogue partner’ of ASEAN, with annual summit level
meetings with its leaders. It is also a participant in the East Asian
Summit, bringing together the ASEAN countries with China, Japan, South
Korea, India, Australia and New Zealand.

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ith China
emerging as the major power in Asia, India now has to face the challenge of
cooperating with it, even while building a stable balance of power in Asia.
China’s policy of providing assistance to Pakistan’s nuclear weapons and
missile programmes, the efforts to expand its presence through a ‘string
of pearls’ strategy with facilities in the Indian Ocean ranging from the
Cocos Islands in Myanmar to Gwadar in Pakistan, its policy of encroaching
politically and even militarily into Bhutan and Nepal, and its insatiable
quest for oil, gas and other natural resources to the exclusion of India are
challenges India can no longer ignore.

Moreover, with its growing demand for water, China could
pose serious ecological and other problems for India were it to divert the
waters of the Brahmaputra river for its own use. These challenges will
necessarily have to be countered with much wider exchange and cooperation
with China’s neighbours in the Asia-Pacific, like Vietnam and Japan.
Hopefully, increasing cooperation with the US will add credibility and clout
to these efforts. At the same time, a continuing engagement with China is
required on issues like global warming, maintenance of peace and security
along the borders and in promoting trade, investment and other economic
ties.

Despite the internal problems besetting virtually all the
countries in South Asia, the one silver lining is that economic cooperation
in an increasingly interdependent and globalized world order could well
serve as a catalyst, not only in promoting prosperity but also in bringing
the South Asian countries together. In a report titled ‘SAARC Vision
Beyond the Year 2000’, a group of eminent persons from the member states
recommended working together in a phased manner to make the South Asian
region a Free Trade Area by 2010, a Customs Union by 2015 and an Economic
Union by 2020. The Heads of Government of the SAARC countries endorsed these
recommendations during the Kathmandu Summit in 2003 and the framework of a
Free Trade Agreement was finalized at the Islamabad Summit in 2004. Except
for Pakistan, which has refused to implement this agreement in its trade
with India, all other SAARC countries are moving ahead.

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n the meantime,
Afghanistan has been admitted to SAARC and is set to join its Free Trade
Agreement. With growing international interest in seeing SAARC succeed, the
US, EU, China, Japan and South Korea have been accepted as observers at
SAARC summits. Iran is set to follow suit. This is a welcome development as
it will lead to international pressure on Pakistan if it persists in
scuttling efforts to promote free trade and greater economic integration in
the region.

Moreover, India has also worked to develop a new regional
organization, BIMSTEC, to link littoral and hinterland states in the Bay of
Bengal in a process of economically integrating SAARC members – Nepal,
India, Bhutan, Bangladesh and Sri Lanka – with two geographically
contiguous members of ASEAN, Myanmar and Thailand. With BIMSTEC committing
itself to free trade by around 2016, there could well be free trade areas
extending from Delhi to Manila in the east and from Kabul to Delhi to our
west. Moreover, if Pakistan continues to act in a recalcitrant manner on
trade and economic cooperation with India, it could well find itself
isolated from the larger trends of increasing economic integration within
Asia. It must, however, be acknowledged that despite India’s rhetoric
about a commitment to economic liberalization and free trade, it is widely
considered as having one of the most protectionist trade policies in Asia.

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s a result of
the various regional initiatives India is now participating in, we have a
framework for growing economic integration in our neighbourhood. At the same
time we are exploring the possibility of widening our regional economic
network by negotiating a Comprehensive Economic Cooperation Agreement with
the six oil-rich Arab states who are members of the Gulf Cooperation Council
(GCC). Given our past aversion to military blocs, however, we must
acknowledge failure in developing viable structures for cooperative security
in the neighbourhood.

The ASEAN Regional Forum (ARF) is the only regional
security organization of which India is a member. The ARF functions on the
basis of consensus and has endeavoured to develop mechanisms for cooperation
in areas like maritime security and disaster management. But we need to
review our earlier policy of avoiding multilateral engagement in military
matters and explore the possibility of developing viable security structures
with groupings like the GCC, whom we regard as being vital for our energy
security, and for the welfare of millions of Indian nationals resident
abroad. Such a security architecture has to be inclusive and should
accommodate both Iran and Pakistan. Its working should be consensual and
cooperative, much like the manner in which the ARF functions.

India’s role in its ‘extended neighbourhood’ will
be effective only if we can maintain an annual economic growth of around 9%,
and if the process of growth progressively reduces socio-economic tensions.
Moreover, a country with its politics beset by corruption and
criminalization can hardly be expected to serve as a role model for its
neighbours. Further, while the conduct of foreign policy had enjoyed a broad
national consensus in the past, this is unfortunately no longer the case.

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here is also a
tendency within India to believe that problems with neighbours like Pakistan
and Bangladesh, where the politics of defining national identity in positive
terms is still being played out, can be instantaneously sorted out. This is
unrealistic. Due to the dilemmas and contradictions over issues of national
identity, some of our neighbours continue to attribute their problems to
India’s alleged malevolence. Moreover, ruling military elites in Pakistan
and Bangladesh have a vested interest in whipping up fears of alleged Indian
‘hegemony’. Despite these complexities, there has been progress in
recent years even in relations with Pakistan. India has endeavoured not only
to promote cooperation, but for the first time address differences on
complex issues like Jammu and Kashmir imaginatively and flexibly.

We live in a neighbourhood that is both volatile and
challenging. It remains to be seen whether we have the resilience and will
to address these tensions and challenges. Much will depend on the ability to
keep our own house in good order and our determination to develop a national
will and unity of purpose to face these challenges.